2022

Summary of the November 2021 CMAC meeting

24 Jan, 2022

Representatives from the International Accounting Standards Board (IASB) met with the Capital Markets Advisory Council (CMAC) by video conference on 11 November 2021. Notes and recording from the meeting have now been released.

The topics discussed at the meeting included:

  • IASB update
  • Goodwill and impairment
  • Forthcoming Exposure Draft: Supplier Finance Arrangements — Proposed amendments to IAS 7 and IFRS 7.

The meeting summary is available on the IASB website. In addition, the meeting page offers record­ing of meeting.

The next CMAC meeting will be held on 17 March 2022.

FRC opens applications for its Stakeholder Insight Group

24 Jan, 2022

The Financial Reporting Council (FRC) is opening applications for its Stakeholder Insight Group (SIG), a new cross-stakeholder panel that will represent preparers, investors, audit committee chairs and other key stakeholders, including reporting framework owners and civil society groups.

The FRC is seeking to appoint 20 members to the SIG, 10 to serve a nine-month term and 10 to serve an 18-month term. Membership terms will commence on 1 April 2022 and SIG meetings will be held quarterly. These meetings will be an opportunity for members to:

  • share insights on key opportunities and potential areas of focus for the FRC;
  • share perspectives on key areas of concern and emerging risks relating to accounting, reporting, auditing and governance issues;
  • provide input on policy development, the UK Corporate Governance Code, the UK Stewardship Code and the FRC’s approach to ESG and Climate reporting;
  • provide comments on regular enforcement and supervision activities such as Audit Quality Reviews and Enforcement Reviews; and 
  • consider and respond to requests for input and advice from the FRC relating to thematic reviews and other ad-hoc projects.

Both new participants and members of previous FRC advisory groups can apply to join the SIG. Applications are open until Friday 11 February. 

Further information is available on the FRC website

February 2022 IFRS Interpretations Committee meeting agenda posted

21 Jan, 2022

The IFRS Interpretations Committee has posted the agenda for its next meeting, which will be held by video conference on 1 February 2022.

The Committee will discuss the following:

  • IAS 37 — Negative low emission vehicle credits
  • IFRS 9 and IAS 20 — TLTRO III Transactions
  • IFRS 17 — Profit recognition for annuity contracts
  • Work in progress

The full agenda for the meeting can be found here. We will post any updates to the agenda, our com­pre­hen­sive pre-meet­ing summaries as well as observer notes from the meeting on this page as they become available.

EFRAG publishes working papers on sustainability reporting standards

21 Jan, 2022

The Project Task Force on European Sustainability Reporting Standards (PTF-ESRS) of the European Financial Reporting Advisory Group (EFRAG) has released working papers on the first draft standards on sustainability reporting.

The papers reflect the current state of the standard-setting work carried out by the Task Force following the due process the PTF-ESRS has defined for itself.

The cover note that accompanies the set of working papers sets out the intended architecture and structure of the standards, offers a draft index for the European Sustainability Reporting Standards as appendix 1 and access to the individual working papers as appendix 2. The drafts in the working papers published today cover four cross-cutting standards (of a total of five), two conceptual guidelines (of a total of six) and the ESRS E1 Climate change. The cover note highlights that the other working papers will be published in two further batches within the next weeks.

EFRAG emphasises that the publication of the working papers is to ensure a transparent process, it is not a public consultation. A future consultation is mentioned in the cover note, however, not date is given.

Please click to access the cover note linking to the working papers on the EFRAG website.

EFRAG draft comment letter on the classification of debt with covenants

21 Jan, 2022

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the exposure draft 'Non-current Liabilities with Covenants (Proposed amendments to IAS 1)' the IASB published to clarify how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability.

In the draft comment letter, EFRAG supports the IASB’s efforts to address the concerns of constituents that have emerged in the context of the IFRS Interpretations Committee’s agenda decision of December 2020 and accepts that liabilities should be classified as current or non-current based on the situation as at the end of the reporting period.

However, EFRAG raises the following points:

  • EFRAG disagrees with the separate presentation of liabilities classified as non-current for which the entity’s right to defer settlement for at least twelve months after the reporting period is subject to conditions during that time.
  • EFRAG suggests changes to the wording for differentiation between covenants that do not affect the classification at balance sheet date and covenants that affect the classification.
  • EFRAG expresses concerns that the targeted scope of the disclosure requirements may be too broad in practice.

Comments on EFRAG's draft comment letter are requested by 9 March 2022. For more information, see the press release and the draft comment letter on the EFRAG website.

Pre-meeting summaries for the January 2022 IASB meeting

20 Jan, 2022

The IASB will meet in its offices in London on 25 January 2022. We have posted our pre-meeting summaries for the meeting that allow you to follow the IASB’s decision making more closely. We summarised the agenda papers made available by the IASB staff and point out the main issues to be discussed by the IASB and the staff recommendations.

The following topics are on the agenda:

Maintenance and Consistent Application

In April 2021, the IASB published ED/2021/4 Lack of Exchangeability, which proposed to amend IAS 21. The comment period ended in September 2021. The purpose of this paper is to provide the IASB with a summary of feedback on the ED. There was general support for the proposals, with some suggestions. The IASB is not being asked to make any decisions at this meeting.

The staff will update the IASB on the most recent meeting of the IFRS Interpretations Committee.

Business Combinations under Common Control

The IASB published its Discussion Paper (DP) Business Combinations under Common Control (BCUCC) in November 2020. At this meeting the staff will present detailed summaries of feedback on the remaining topics from the DP: how to apply each measurement method (being the acquisition method and the book-value method) and disclosure. The IASB will also discuss the plan for deliberating the preliminary views in the DP. The IASB will be asked whether it agrees with the staffs proposed plan for deliberations but will not be asked to make any further decisions at this meeting.

Board work plan update

The staff will give the IASB an overview of its technical projects to support decisions about whether to add or remove projects, as may be discussed in individual project papers and an assessment of overall progress on the work plan, including project prioritisation and timing. The paper sets out projects completed since the last update, lists the projects out for consultation and notes that no documents are expected to be published for consultation within approximately the next six months. (Note: this conclusion relates only to the IASB. We expect the new ISSB will publish consultation documents during the next six months).

Approach to prioritising matters arising from post-implementation reviews

The staff have developed proposals to provide a more consistent approach to prioritising matters arising from post-implementation reviews (PIRs). The recommendations consider the nature of the evidence collected, what factors should lead to further action and how to prioritise projects.

Feedback on IFRS Taxonomy 2021—Proposed Update

The staff will give an oral update.

Primary Financial Statements

The staff recommend the IASB confirm the requirement for an entity to: disclose a description of why an MPM communicates management’s view of performance, including an explanation of how the MPM is calculated and how the measure provides useful information about the entity’s performance; disclose a reconciliation between an MPM and the most directly comparable subtotal or total specified in the Standards; add a requirement for an entity to disclose, for each item reconciling an MPM to the most directly comparable subtotal or total specified by IFRS Standards, the amount(s) related to each line item(s) in the statement(s) of financial performance; and specify that one way to meet this requirement is to use a side-by-side columnar format for the reconciliation.

The staff recommend the IASB retain the proposed requirements to disclose the income tax effects and the effect on NCI for each item disclosed in a reconciliation between an MPM and the most directly comparable IFRS specified subtotal or total and how the entity determined the income tax effect.

Our pre-meet­ing summaries is available on our January meeting notes page and will be sup­ple­mented with our popular meeting notes after the meeting.

UK government finalises legislation on climate-related financial disclosures

20 Jan, 2022

The Department for Business, Energy & Industrial Strategy (BEIS) has finalised two statutory instruments requiring certain UK companies and LLPs to make climate-related financial disclosures.

Under the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 (SI 2022/31), UK public interest entities, Alternative Investment Market (AIM) companies and high turnover companies with more than 500 employees will be required to report climate-related financial information in the non-financial information (NFI) statement, which is also renamed by the legislation to become the non-financial and sustainability information statement (NFSI). “High turnover” is defined as turnover in excess of £500m per annum.

Meanwhile the Limited Liability Partnerships (Climate-related Financial Disclosure) Regulations 2022 (SI 2022/46) will require LLPs with more than 500 employees and turnover of more than £500m to report climate-related financial information in either the strategic report or, if no Strategic Report is prepared, the Energy and Carbon Report which forms part of their Annual Report.

Non-binding Q&As will be produced in due course to support companies and LLPs in their application of these requirements which take effect for financial years commencing on or after 6 April 2022.

More details on the legislation can be found in our previous news item on this topic. The final regulations are available at www.legislation.gov.uk:

Summary of the December 2021 ASAF meeting now available

19 Jan, 2022

The IASB staff have published a summary of the Accounting Standards Advisory Forum (ASAF) meeting held via remote participation on 9-10 December 2021.

The topics covered during the meeting were the following (numbers in brackets are references to the corresponding paragraphs of the summary):

  • Intangibles (1–8): The ASAF members generally agreed that the issues discussed in the EFRAG’s discussion paper Better Information on Intangibles are relevant and valid and said the IASB should undertake a comprehensive review of IAS 38 Intangible Assets, working with the ISSB to consider any relationship between intangibles and any future sustainability-related disclosure standards.
  • Strategic / agenda consultations (9–42): The AcSB, EFRAG, FASB and AASB are currently seeking feedback from stakeholders on their future agendas. The ASAF shared feedback and questions and discussed how it compares to the feedback on the IASB’s agenda consultation.
  • Agenda planning and feedback from the previous ASAF meeting (43–44): The ASAF members agreed with the proposed topics for the next ASAF meeting and also suggested discussing the projects on primary financial statements and dynamic risk management.
  • Goodwill and impairment (45–66): The ASAF members received an update on the IASB’s recent discussions and provided feedback on the staff examples illustrating the information the staff expects an entity to disclose when applying the IASB’s preliminary views about adding disclosure requirements to IFRS 3 Business Combinations.
  • Disclosure initiative — Subsidiaries without public accountability: Disclosures (67–81): The ASAF members shared their preliminary views on the scope of the IASB’s exposure draft Subsidiaries without Public Accountability: Disclosures published in July 2021.
  • Disclosure Initiative — Targeted Standards-level review of disclosures (81–92): The ASAF members were updated on initial feedback from the IASB’s outreach on the exposure draft Disclosure Requirements in IFRS Standards — A Pilot Approach and shared feedback from their jurisdictions on the IASB’s proposals, including on the guidance for the Board, new disclosure requirements for IFRS 13, and new disclosure requirements for IAS 19.

A full summary of the meeting is available on the IASB's website.

Updated Accounting Direction for social housing providers issued

19 Jan, 2022

The Regulator of Social Housing (RSH) has published the latest rules on accounting for registered and social housing providers for preparation of their accounts from January 2022

Private registered providers (PRP's) of social housing are required by section 127 of the Housing and Regeneration Act 2008 to comply with a Direction of the Regulator of Social Housing about the preparation of their accounts.  The Accounting Direction for private registered providers of social housing 2022 sets out the regulator’s directions about how PRPs must prepare their accounts in relation to certain matters  It applies to PRPs in terms of the preparation of their accounts and to profit making PRPs only in so far as their accounts relate to social housing activities.

The Accounting Direction takes effect for accounting periods beginning on or after 1 January 2022 and supersedes the requirements of the Accounting Direction for PRPs of Social Housing 2019.  The 2019 Direction continues to apply to accounts for periods beginning before 1 January 2022 although earlier adoption of this Direction is encouraged.

The Accounting Direction is available at the Regulator of Social Housing website.

UKEB publishes 2022/23 Regulatory Strategy

19 Jan, 2022

The UK Endorsement Board (UKEB) has published its 2022/23 Regulatory Strategy for consultation.

The UKEB’s work is focused on influencing the development and adoption of high-quality financial reporting standards that promote the UK public good by ensuring transparency and comparability of financial information, and the smooth functioning of capital markets.

The draft Regulatory Strategy contains the UKEB's 2022/23 workplan and also its strategic objectives for 2022/25.  As the UKEB’s statutory functions relate to influencing the International Accounting Standard Board (IASB) during the development of new and amended International Financial Reporting Standards (IFRS) and the subsequent adoption of those standards, the work plan is necessarily focused on the projects on the IASB's current and future agenda, or those issued standards and amendments requiring adoption for use in the UK.   

The strategic objectives for 2022-2025 include:

  • influencing the IASB and other global players on the development of high-quality financial reporting standards;
  • assessing all new and amended international standards for adoption in the UK on a timely basis; and
  • establishing and maintaining a robust operations framework to support its strategic objectives.

The UKEB's 2022/23 budget is contained within the Financial Reporting Council's (FRC's) draft 3 year plan which was concurrently published.

The 2022/23 Regulatory Strategy consultation will run until 1 March 2022. 

The press release and Regulatory Strategy 2022/23 are available from the UKEB website.

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